05-1483. Voluntary Separation Incentive Payments

AGENCY:

Office of Personnel Management.

ACTION:

Final rule.

SUMMARY:

The Office of Personnel Management (OPM) is issuing final regulations on Voluntary Separation Incentive Payments (generally known as “VSIPs” or “buyouts”). These final regulations explain how an agency requests authority from OPM to offer Voluntary Separation Incentive Payments under the Chief Human Capital Officers Act of 2002, which applies to most executive branch agencies.

These final regulations also explain how agencies must inform employees returning from military leave of any Voluntary Separation Incentive Payment offers they may have missed while on military leave. Finally, these regulations explain how in exceptional circumstances an agency that is hiring a former employee who previously received a Voluntary Separation Incentive Payment may request that OPM waive the general requirement that the individual repay the incentive if reemployed in the Government within 5 years of receiving the incentive.

DATES:

These regulations are effective January 27, 2005.

FOR FURTHER INFORMATION CONTACT:

Sharon K. Ginley at (202 606-0960, fax at [phone], TTY at [phone], or e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

Section 1313(a) of the Chief Human Capital Officers Act of 2002 (Public Law 107-296; 116 Stat. 2135) added new sections 3521 through 3525 to title 5, United States Code, to allow executive branch agencies, at their option, to offer Voluntary Separation Incentive Payments to employees who separate by voluntary retirement or by resignation. On February 4, 2003, OPM issued interim regulations to revise part 576 of title 5, Code of Federal Regulations, with a request for public comments. These final regulations incorporate public comments and make clarifying revisions.

To offer buyouts, an agency must submit a plan for OPM approval. The plan must describe how the agency will use Voluntary Separation Incentive Payments as a tool to facilitate its restructuring goals. OPM will review each agency's plan and, in consultation with the Director of the Office of Management and Budget (OMB), may make any appropriate modifications to the agency's plan for Voluntary Separation Incentive Payments. The review may include a consideration of costs and benefits associated with using the authority. OPM will issue supplemental guidance for agency use in preparing a VSIP implementation plan. The agency must have OPM approval before using this flexibility.

A former employee who accepts any employment with the Government of the United States for compensation within 5 years after the date of separating for a Voluntary Separation Incentive Payment must repay the entire amount of the incentive payment before the first day of reemployment in the Federal service. Under exceptional circumstances, and at the request of the hiring agency, the OPM Director may waive the repayment requirement for former executive branch employees.

Comments Received

OPM received five comments from agencies concerning the interim regulations. One agency pointed out that the interim regulations contained the words “* * * to offer Voluntary Separation Incentive Payments to surplus or displaced employees.” The agency pointed out that the words “surplus or displaced” were not in Public Law 107-296. We agree that the words are unnecessary, but note that they were mentioned only in the Supplementary Information to the interim regulations, and not the actual interim regulations themselves. We have not included those words in the final regulations.

Two agencies disagreed with OPM's interpretation of the phrase “currently employed for a continuous period of at least 3 years,” which is a minimum service requirement for a Voluntary Separation Incentive Payment. OPM's interpretation has been 3 years of continuous employment within the same agency, and it had been included in OPM's instructions to agencies in the use of Voluntary Separation Incentive Payments (attached to Voluntary Separation Incentive Payment approval letters). For purposes of clarification, in order to fall within the coverage of section 576.101(b) of this regulation, an individual must have 3 years of current continuous employment as an employee within the meaning of 5 U.S.C. 2105 or 16 U.S.C. 590(h)(b)(5).

One agency expressed concern with the regulations allowing OPM, in consultation with OMB, to modify an agency's buyout plan. They said that the requesting agency should also be consulted before any changes are made to its plans. Although the statute does not require OPM to consult with the agency before modifying a plan, we agree with the commenter, and have made the suggested change.

Two agencies expressed concern that the requirements in section 576.102(c) of the interim regulations are more restrictive than the provisions of Public Law 107-296. Section 576.102(c) of the interim regulations requires listings of employees by organizational unit, geographic location, occupational category, and grade level. Public Law 107-296 requires “* * * a description of which categories of employees will be offered incentives.” Of the two agencies that commented about this section, one felt that the more detailed requirements in section 576.102(c) hamper managerial flexibility during restructuring. The other agency expressed concern that these requirements hinder an agency's ability to plan for restructuring (and submit requests for buyout authority) during periods when competitive sourcing is being studied. They pointed out that specific information about the positions for which they intend to offer buyouts might be sensitive at that time. Also, they said, such information might be inaccurate depending upon whether they won or lost a bid.

In addition to the Public Law 107-296 requirement the agency cited above, the statute also requires that agency plans identify “the specific positions and functions to be reduced or eliminated” and specifies the basis upon which employees shall be offered voluntary incentive payments. Identifying specific positions and functions necessarily entails identification of organizational units, occupational series or levels, and geographic locations. OPM believes, therefore, that its requirements are consistent with the statute and in the best interest of the Federal Government. Requiring the specific information about the positions for which agencies plan to offer buyouts is the best way to ensure that agencies' buyout plans are executed in the manner intended by the statute. Retaining the level of position specificity shown in the interim regulations will reinforce the fact that this is a management tool and not an employee entitlement. In regard to the competitive sourcing comment, OPM will work with agencies to determine the best course of action during study periods. For these reasons, we are retaining the specific position requirements contained in section 576.102(c) of the interim regulations. They can be found in section 576.102(a) of the final regulations.

Final Rule

New subpart A of 5 CFR part 576 defines the terms “Employee” and “Specific Designee” and provides additional guidance concerning making buyout offers to employees.

New subpart B of 5 CFR part 576 discusses the term “employment with the Government of the United States” for buyout repayment and waiver of buyout repayment purposes. It indicates that personal service contracts and other direct contracts are considered to be employment with the Government of the United States for buyout repayment purposes. Like other buyout recipients who accept Federal employment within 5 years of receipt of a buyout, employees working on personal service contracts and other direct contracts are also subject to buyout repayment if they begin working on such contracts within 5 years of receipt of a buyout.

Regulatory Flexibility Act

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because it affects only certain Federal employees.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

List of Subjects in 5 CFR Part 576

• Government employees
• Wages

U.S. Office of Personnel Management.

Kay Coles James,

Director.

Accordingly, OPM amends part 576 of title 5, Code of Federal Regulations, as follows:

1. Part 576 is revised to read as follows:

PART 576—VOLUNTARY SEPARATION INCENTIVE PAYMENTS Subpart A—Voluntary Separation Incentive Payments

576.101

Definitions.

576.102

Voluntary Separation Incentive Payment implementation plans.

576.103

Offering Voluntary Separation Incentive Payments to employees.

576.104

Additional agency requirements.

576.105

Existing Voluntary Separation Incentive Payment authorities.

Subpart B—Waiver of Repayment of Voluntary Separation Incentive Payments

576.201

Definitions.

576.202

Repayment requirement.

576.203

Waivers of the Voluntary Separation Incentive Repayment requirement.

Authority: Sections 3521, 3522, 3523, 3524, and 3535 of title 5, United States Code.

Subpart A—Voluntary Separation Incentive Payments

§ 576.101

Definitions.

In this part:

Employee, as defined in 5 U.S.C. 3521, means an employee as defined under 5 U.S.C. 2105 employed by an agency and an individual employed by a county committee established under section 8(b)(5) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)(5)) who—

(1) Is serving under an appointment without time limitation; and

(2) Has been currently employed for a continuous period of at least 3 years.

Specific designee means a senior officer or official within an agency who has been specifically designated to sign requests for authority to offer Voluntary Separation Incentive Payments for, or in place of, the head of the agency. Examples include the Chief Human Capital Officer, the Assistant Secretary for Administration, the Director of Human Resources Management, or a deputy of one of these persons.

§ 576.102

Voluntary Separation Incentive Payment implementation plans.

(a) In accordance with section 3522(b) of title 5, United States Code, a plan submitted by the head of an agency, or his or her specific designee, must include:

(1) Identification of the specific positions and functions to be reduced or eliminated, identified by organizational unit, geographic location, occupational series, grade level and any other factors related to the position;

(2) A description of the categories of employees who will be offered incentives identified by organizational unit, geographic location, occupational series, grade level and any other factors, such as skills, knowledge, or retirement eligibility (as discussed in implementing guidance);

(3) The time period during which incentives may be paid;

(4) The number and maximum amounts of Voluntary Separation Incentive Payments to be offered;

(5) A description of how the agency will operate without the eliminated or restructured positions and functions;

(6) A proposed organizational chart displaying the expected changes in the agency's organizational structure after the agency has completed the incentive payments;

(7) A short explanation of how Voluntary Early Retirement Authority will be used in conjunction with separation incentives, if the agency has requested, or will request, that authority; and

(8) A description of how Voluntary Separation Incentives offered under another statutory authority are being used, if the agency is offering incentives under any other statutory authority.

(b) When submitting a plan to OPM, the agency may submit either:

(1) A specific Voluntary Separation Incentive Payment implementation plan outlining the intended use of the incentive payments, or

(2) The agency's human capital plan, which outlines the intended use of the incentive payments and the expected changes in the agency's organizational structure after the agency has completed the incentive payments. If the human capital plan is submitted, it must include the information specified in paragraph (a) of this section.

(c) OPM will consult with the Office of Management and Budget regarding the plan and any subsequent modifications, and will notify the agency head in writing when the plan is approved. The review may include a consideration of costs and benefits associated with using the authority. If there are questions concerning the agency's plan, OPM reserves the right to contact the agency, inform agency staff of its concerns, and require that the agency revise the plan to bring it into conformance with these regulations. The agency must obtain OPM approval before offering incentives under this authority.

§ 576.103

Offering Voluntary Separation Incentive Payments to employees.

(a) Agencies may make offers of Voluntary Separation Incentive Payments to employees who agree to voluntarily separate by resignation, early retirement, or optional retirement.

(b) Each time an agency with authority to offer Voluntary Separation Incentive Payments establishes a window period for acceptance of Voluntary Separation Incentive applications, it may limit offers to its employees based on an established opening and closing date or the acceptance of a specified number of applications. However, at the time of the offer, the agency must notify its employees that it retains the right to limit the number of Voluntary Separation Incentive Payment offers by use of a specific closing date or by receipt of a specified number of applications.

(c) An agency's downsizing and/or reshaping strategy may change, necessitating a change in the offer notice to employees. If the amended notice includes a revised closing date, or a revised number of applications to be accepted, the new date or number of applications must be announced to the same group of employees included in the original announcement. If a new or separate notice includes a new window period with a new closing date, or a new instance of a specific number of applications to be accepted, the new window period or number of applications to be accepted may be announced to a different group of employees as long as the new group is covered by the approved Voluntary Separation Incentive Payment authority.

(d) Section 4311 of title 38, United States Code, requires that, for all practical purposes, agencies treat employees on military duty as though they were still on the job. Further, employees are not to be disadvantaged because of their military duty. In accordance with these provisions, employees on military duty who would otherwise be eligible for an offer of a Voluntary Separation Incentive Payment will have 30 days following their return to duty to either accept or reject an offer of a Voluntary Separation Incentive Payment. This is true even if the Voluntary Separation Incentive Payment authority provided by OPM has expired.

(e) An employee may separate from the service voluntarily, with a Voluntary Separation Incentive Payment, if, on the date of separation, the employee:

(1) Is serving in a position covered by a Voluntary Separation Incentive Payment offer; and

(2) Meets the definition of employee discussed in 5 U.S.C. 3521.

(f) Agencies are responsible for ensuring that employees are not coerced into accepting a Voluntary Separation Incentive Payment. If an agency finds any instances of coercion, it must take appropriate corrective action.

(g) An agency may not offer Voluntary Separation Incentive Payments beyond the stated expiration date of an authority or assign an effective date for a Voluntary Separation Incentive Payment that is beyond the time period for paying a Voluntary Separation Incentive Payment that was stated in the agency's approved Voluntary Separation Incentive Payment plan.

(h) An agency may not offer Voluntary Separation Incentive Payments to employees who are outside the scope of the Voluntary Separation Incentive Payment authority approved by OPM.

(i) OPM may amend, limit, or terminate Voluntary Separation Incentive Payment authority if it determines that the agency is no longer undergoing the condition(s) that formed the basis for its approval or to ensure that the law and regulations governing Voluntary Separation Incentive Payments, including the Voluntary Separation Incentive Payment usage reporting requirements, are being properly followed.

§ 576.104

Additional agency requirements

(a) After OPM approves an agency's plan for Voluntary Separation Incentive Payments, the agency is required to immediately notify OPM of any subsequent changes in the conditions that served as the basis for the approval of the Voluntary Separation Incentive Payment authority.

(b) Agencies are required to provide OPM with interim and final Voluntary Separation Incentive Payment reports, as covered in OPM's approval letter to the agency. OPM may suspend or cancel a Voluntary Separation Incentive Payment authority if the agency is not in compliance with the reporting requirements or reporting schedule specified in OPM's Voluntary Separation Incentive Payment authority approval letter.

§ 576.105

Existing Voluntary Separation Incentive Payment authorities.

As provided in section 1313(a)(3) of Public Law 107-296, any agency exercising Voluntary Separation Incentive authority in effect on January 24, 2003, may continue to offer Voluntary Separation Incentives consistent with that authority until that authority expires. An agency that is eligible to offer Voluntary Separation Incentive Payments under this authority and under any other statutory authority may choose which authority it wishes to use, or offer incentives under both.

Subpart B—Waiver of Repayment of Voluntary Separation Incentive Payments

§ 576.201

Definitions.

‘Employment’ means employment with the Government of the United States, including employment under a personal services contract (or other direct contract) with the United States Government (other than an entity in the legislative branch) unless employed pursuant to § 576.203(a).

§ 576.202

Repayment requirement.

An executive branch employee who received a Voluntary Separation Incentive Payment as described in subpart A of this part and accepts any employment for compensation with the Government of the United States within 5 years after the date of the separation on which the payment is based must repay the entire amount of the Voluntary Separation Incentive Payment to the agency that paid it before the individual's first day of reemployment.

§ 576.203

Waivers of the Voluntary Separation Incentive Repayment requirement.

(a)(1) If the proposed reemployment is with an agency other than the General Accountability Office, the United States Postal Service, or the Postal Rate Commission, the Director of the Office of Personnel Management may, at the request of the head of the agency, waive the repayment if—

(i) The individual involved possesses unique abilities and is the only qualified applicant available for the position; or

(ii) In case of an emergency involving a direct threat to life or property, the individual—

(A) Has skills directly related to resolving the emergency; and

(B) Will serve on a temporary basis only so long as that individual's services are made necessary by the emergency.

(2) If the proposed reemployment is with an entity in the legislative branch, the head of the entity or the appointing official may waive the repayment if the individual involved possesses unique abilities and is the only qualified applicant available for the position.

(3) If the proposed reemployment is with the judicial branch, the Director of the Administrative Office of the United States Courts may waive the repayment if the individual involved possesses unique abilities and is the only qualified applicant available for the position.

(4) The repayment waiver provisions under this section do not extend to a repayment obligation resulting from employment under a personal services contract or other direct contract.

(b) For a Voluntary Separation Incentive Payment made under statutory authority other than subpart A of this part, the agency should review the authorizing statute and, if a waiver is permitted, submit a request as specified by that statute.